American Leadership, a Casualty of the Meltdown

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Stephen Chernin / AP

A trader at the New York Stock Exchange takes a break as the Dow Jones industrial average plummets on Sept. 29

Yuriko Koike is a Japanese politician with an engaging manner, a fine track record as a cabinet minister, a worldly outlook and the sort of fresh approach that Japanese politics so desperately needs. None of that did her much good when she recently ran for the leadership of the ruling Liberal Democratic Party — she received just 46 ballots out of a possible 527. Why did she do so badly? Not just because of some residual male chauvinism, perhaps, but also because she was too obviously the candidate of reform, of liberalization — in other words, she was the candidate who was deemed most "American."

These days, that's not a great attribute to have.

In the past two weeks, as the financial crisis has developed, I've been traveling in Europe and Asia, talking to business leaders, bankers and academics. It has been a sobering experience. I can't remember a time when so many were so disturbed by what was happening in the U.S., or so worried about what the next few months might hold. Even in China, the post-Olympics, post-spacewalk euphoria has been tempered by the appreciation that the contraction of the U.S. market for its exports will put one of the key drivers of China's economic growth into neutral.

Everywhere, I've faced questions about what's going on in the U.S.: about who will win the presidential election and what he will do when he takes office; about why the House of Representatives voted down the financial rescue package; and about whether U.S. leaders have the combination of skill and guts to get to the far side of the crisis. What I've not found, anywhere, is schadenfreude, a sense of glee at America's misfortune. Things are too serious for that. But there is a palpable sense that the financial crisis, and Washington's stumbling reaction to it, represents a defining moment. The days when the U.S. could lecture other nations on the correct way to run their affairs are gone. The British philosopher John Gray put the case at its starkest in the Observer: "The era of American global leadership, reaching back to the Second World War," Gray wrote, "is over."

Gray is an interesting man to make that point, because in the 1970s he was one of the intellectual godfathers of Thatcherism, the belief that free markets and red-in-tooth-and-claw capitalism were the essential underpinnings of successful modern societies. Granted, he has been moving away from such neoliberal fundamentalism for years. I remember a conversation with him precisely 10 years ago — after the collapse of Long Term Capital Management and Russia's default, the last time when it looked as if the market revolution were in peril — when he lamented that neoliberals had "underestimated the revolutionary nature of global capitalism," with its power to upend the familiar landscape and turn it into a churning place of impermanence. But I doubt that even Gray would have predicted that the U.S. itself would be revealed as being unable to cope, at an economic, political or indeed intellectual level, with the consequences of modern financial capitalism.

Outside the U.S., that failure is being widely noted. These last days, it has been common in the commentariat to deplore an absence of American "leadership." But the issue today is really one of followership — in other words, whether nations outside the U.S. would take their cue from New York City and Washington even if both those cities were inhabited by latter-day Solons.

I do not think they would. The U.S. no longer has a monopoly on modernity, as it did in 1945. There are now too many examples of successful economies that are not organized on American principles. There are other models for aspiring policymakers to follow; they do not all have to go to Harvard's Kennedy School for enlightenment.

That was brought home to me at a World Economic Forum conference in China last weekend, when I found myself (these things happen) at dinner with three Swedish entrepreneurs. They were, as you would expect, fun, clever, technologically up to the minute. And I thought: What do Sweden and China have in common? Just this, perhaps: one already rich, one rapidly becoming richer, neither nation is in thrall to American verities on the ways in which societies should be organized.

Spare a thought for Yuriko Koike; she's in the wrong decade.

(See photos of the global financial crisis here.)

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